Protocol | China

Red Vs are after China’s queer community

WeChat's closure of student-run LGBTQ+ accounts has triggered nationalist frenzy and an antitrust report.

An illustration featuring the popular Chinese all-purpose app WeChat on a phone screen against the People's Republic of China flag

For queer activists — current and former students who have experienced waves of political tightening — the abrupt WeChat ban and its aftermath is unsurprising, but still disappointing.

Image: Budrul Chukrut/SOPA Images/LightRocket/Getty

When mobile social platform WeChat shut down nearly 20 accounts run by campus LGBTQ+ clubs and nonprofit organizations on July 6, the Chinese queer community home and abroad were sad and enraged — but mostly perplexed. No one knew what might have triggered the bans. It was only in the following week, when nationalist influencers, or Red Vs, launched a campaign targeting China's LGBTQ+ community for ties with "anti-China forces" that queer students realized that they have been pulled into a nationalist frenzy.

Most of the banned WeChat accounts had been run by students at elite Chinese universities, including Peking University in Beijing and Fudan University in Shanghai. WeChat didn't specify why it deleted the accounts other than to provide a brief notice stating the accounts "violated rules," a former staff member of an LGBTQ+ club, whom we will call Zhang, told Protocol. (Zhang's real name is being withheld for safety reasons.)

Zhang said that the students had sought explanations from the compliance department of Tencent, WeChat's parent company, but they didn't get much information other than it was "not a decision made by one person," Zhang said. Tencent didn't respond to Protocol's inquiry for comment.

It's unclear whether Tencent followed a government directive to wipe out campus LGBTQ+ accounts or whether it preemptively shuttered them. China's government is tightening ideological control on school campuses. "School used to be a safe haven to shield us from political complications," Zhang said. "But ideological control is getting tighter and tighter on university campuses."

With the world's largest population, China is also home to the world's largest LGBTQ+ population. China decriminalized homosexuality in 1997 and then removed it from an official list of mental illnesses for clinical treatment in 2001. In the past few decades, Chinese youth have shown increasing tolerance and support toward sexual minorities, but the community still faces overt discrimination at home, at work and in society at large.

LGBTQ+ student organizations in China have long found themselves in a precarious situation. Most are not formally registered with their universities. As a result, these campus clubs receive no institutional recognition and support. Sex education is absent in most Chinese schools and universities. In this environment, university LGBTQ+ WeChat accounts and their WeChat groups served as a critical online platform for isolated queer youth to explore their sexual identity, find a community and advocate for diversity and inclusion.

But the space for advocacy is fast eroding as the Chinese government tightens restrictions on civil society and steps up an ideological campaign in the education sector. To avoid being seen as confrontational, organized collectives influenced by Western ideology, some LGBTQ+ organizations have adopted a more moderate tone to appear to align with official values. For example, instead of championing human rights and equality, their narratives have shifted to promote "the harmony of family and society," according to one queer activist.

"The activity and advocacy of queer student groups is politically risky due to its potential tension with the Party-state ideologies and social control," Le Cui, a former university teacher in China and a doctoral candidate studying queer issues in education at the University of Auckland, told Protocol. "This move shows that the authorities have become increasingly intolerant of queer discussion and activism in universities."

On July 7, a lawyer reported Tencent to the State Administration of Market Regulation, China's antitrust watchdog, alleging that Tencent's shutdown of the LGBTQ+ accounts had violated the country's anti-monopoly law. The lawyer suggested the antitrust watchdog fine Tencent $7.4 billion, or 10% of Tencent's 2020 annual revenue, the maximum amount allowed under draft amendments to the country's anti-monopoly law, which are expected to pass later this year.

Queer activists often challenge the authorities through legal means, not because they expect to win, but as a mostly symbolic attempt to convey their displeasure to authorities. This is the first time an individual has challenged a tech giant using the same antitrust measures that Beijing is actively employing to crack down on the tech industry.

Ultra-nationalists' new target

Just as some in the student queer community started to bounce back from shock, rage and fear after the WeChat ban and discuss how to rebuild their communities, they found themselves in the crosshairs of Red Vs — ultra-nationalistic influencers (爱国营销号) on Weibo who have amassed large followings for instigating attacks against individuals and groups whose political stances don't align with their own.

Nationalistic outbursts have swept across China this year, the 100th anniversary of the founding of the Chinese Communist Party. Grassroots nationalists on Weibo had launched hate campaigns against feminist activists and popular science bloggers in the previous two months, patching together what they see as evidence of the individuals' or groups' foreign associations. Their attacks have resulted in the shuttering of dozens of Weibo accounts held by feminist activists and pop-science bloggers.

The queer community is now weathering a similar purge campaign. Some online voices have accused the West of using LGBTQ+ ideas to undercut China's global rise. "External forces first show that they understand minorities, and then propagate how much minorities are respected in the West. After such brainwashing, minority groups will mostly lose their confidence in China's system and follow suit to become the West's vassals," one WeChat blogger wrote. "China's competitiveness lies in its demographic dividend, and through LGBT propaganda external forces are reducing China's fertility rate to weaken China's competitiveness."

On Weibo, the prominent nationalist influencer with the handle @ziwuxiashi (子午侠士) — roughly translated as "Knight of the South and the North" started firing unsubstantiated accusations at campus LGBTQ+ clubs just a few days after the WeChat ban, hinting that they'd received funding from foreign organizations. On July 9, @ziwuxiashi put out a call for tips on "collusion of LGBT organizations with foreign countries and their source of funds."

Some of the grassroots nationalists involved in the recent campaign appear to have connections with Chinese authorities. In late May, @ziwuxiashi shared with followers the news that "issues like feminism and LGBT have been given a high priority at the national level," and wrote that he had submitted "evidence" about feminist activists and LGBTQ+ groups he has collected to "relevant state authorities." Last year, the Shaanxi province Cyberspace Administration Office publicly pledged to work with the @ziwuxiashi in order to propagate the Party line. In a 2016 profile of him published by the Communist Youth League, the self-proclaimed former military member expressed the need to instill "a sense of urgency and mission around cyber ideological struggle" into China's youth.

For queer activists, the abrupt WeChat ban and its aftermath is unsurprising but disappointing. "In the past few years, public opinion has increasingly tied sexual minorities with 'color revolutions' imported from overseas," Zhang said. "Considering the changes that had been gradually taking place, what happened this time wasn't unexpected."

Queer activists in and outside of China are finding ways to rekindle and fuel their campaigns. Last weekend, they held offline events in at least two Chinese cities. And overseas, dozens of Chinese queer activists and supporters gathered in New York, London and Vancouver to commemorate the deleted LGBTQ+ WeChat accounts. They started a #404queerChina campaign, hanging rainbow flags in parks and exhibiting artwork to support China's queer movement.

Activists and researchers worry this current crackdown will have a chilling effect on China's queer activism. Some students read the recent moves as a sign of the Party-state trying to wipe out their identity and have decided to leave their organizations, but others are not giving up. "We can always start over," Zhang said.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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